Kansas City just launched a $10M co-investment fund for its startup community - Technical.ly

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Apr. 13, 2016 10:32 am

Kansas City just launched a $10M co-investment fund for its startup community

Called KCRise, it's from a consortium of local economic development groups aiming to grow the amount of venture capital flowing into the City of Fountains.
This is a guest post by Darcy Howe, the managing director of the KCRise Fund.

It used to be that if you were a startup founder, you needed to be located on one of the coasts to attract significant investment. Why? Because scaling a new company requires venture capital — which traditionally has not been plentiful in the Midwest.

Though we have excellent access to talent, low business costs and cutting-edge technologies — including our status as the first metro with one gigabit Google Fiber — cities like Kansas City have lagged behind the coasts in terms of attracting investment to support early-stage businesses. (With the region’s $91 million in venture capital in 2015, Kansas City ranked as the 42nd largest U.S. market in terms of dollars raised.)

You see, families of wealth in the Midwest are, by nature, conservative with their investable assets, and many have not, until now, seen a path to investing in early-stage businesses. And at the same time, our local entrepreneurs often couldn’t garner attention from investors in Boston and San Francisco.

Our mission is to reverse this pattern.

We at KC Rising, a joint effort from the Kansas City Area Development Council, the Mid-America Regional Council and the Civic Council, recently announced a new investment fund known as KCRise, which will match local investors with approved venture capital firms that professionally manage early-stage investments. Our local partners will invest at least $1 for every $5 invested by a VC, adding up to $120 million in funding to Kansas City-area startups over the life of the fund. (It’s one way to make it on more Top 10 lists.)

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This new concept has already attracted 30 local investment entities, including Great Plains Energy, the University of Kansas Medical Center, JE Dunn Construction, Lockton Inc., as well as multi-generational families of wealth. Since January 2016, we have commitments for more than $10 million of the $20 million we expect to raise this year.

Several “next generation” members of KC’s wealthy families are interested in assuming leadership as investors in the future of the KC economy. Through a series of educational events, we aim to build trust between investors and entrepreneurs — and teach skill sets needed to become successful investors.

“As a venture fund that looks to invest in KC companies, we are really impressed with the KCRise fund,” said Brian Hopcraft, an investor with LAC Ventures. “Providing additional capital for the most promising local companies that receive venture investment is a big benefit. Perhaps a greater benefit is how KCRise will connect local investors with venture funds.”

Ultimately, we will help the Kansas City area economy grow in trade, ideas and human capital by growing the early-stage investor class and bringing more venture capital attention to KC.

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